Asking the right questions

It seems to me that the key to raising commercial capability – and to delivering value more generally – is to ask the right questions.

We all know that today’s networked world is enabling many new questions to be asked and answered. Our ability to collect, consolidate and analyze data is progressing at a remarkable pace. Perhaps the biggest challenge is to help people realize the range of questions that can now be asked – and of course the way that answers to these transforms the nature and effectiveness of what we do.

In my role at IACCM, I come across examples of this every day. For instance, something I have been wrestling with for a few years is to better understand the interaction between contracts and relationships. Traditional thinking sees them as connected, yet largely independent of each other. Yet much has changed. The complexity of relationships, the increased numbers of ‘stakeholders’, the regulatory pressure for transparency and clarity, the growing responsibility of suppliers for securing outcomes …. many factors are increasing the importance of increased rigor in the relationships we select and the discipline with which they are managed.

But on the counter-side, this also means that the ability to have a good relationship is becoming acknowledged as far more important. So factors such as behavior, culture, demonstrated competence in contract management are becoming key elements in supplier (and sometimes in customer) selection.

All of this raises many ‘new’ questions and I plan to discuss a number of these over coming days. But for today, i am interested in the issue faced by many buyers; if I select suppliers based on the potential for a good relationship, how do I prevent erosion of the benefits gained from ‘commoditization’ and ‘competition’?

Of course there are arguments – and methods – to address this, which include better understanding the true elements of cost (rather than just price) and expanding the elements of competition to include demonstrated performance in the market. But the concern will remain – ‘how do i know I am getting value if i don’t go back to the market on a regular basis? How do I stop this relationship becoming ‘cozy’ and inefficient?’

I think the answer to this may lie in transforming the benchmarking process. In this day of ‘big data’, there are many more possibilities to benchmark and it is not unreasonable to expect that much of this data should be coming from the supplier itself – and of course be something that the buyer can verify. For example, why would I not ask the supplier to give me regular updates on the percentage of bids they are winning for products or services similar to mine, and the average price at which those are being won?

I might also commission periodic benchmarks of the regulatory performance of my supplier relative to their peers. And I might recognize the need for shared benchmarks related to our interactions with each other, so that we could work together on improving performance and reducing the costs of our operations.

I have been working on a presentation about the role of benchmarks in the future; I hope you will share your thoughts and ideas on this, especially in respect of how it could lead to more sustainable relationships and a more efficient way to measure and monitor ‘competition’.